10 March 2016

EPC: Blockchain: a short-lived illusion or a real game changer?

Blockchain has traditionally been a subject of mitigated opinions, due to its early association with bitcoin, the cryptocurrency adopted by techies all around the world, and also used on anonymous markets on the web. As the potential of blockchain is slowly being discovered, it is now getting the full attention of the banking and technology industries. Many major financial and technology organisations are exploring its benefits. For example, more than 40 international banks are part of R3, a New York City-based consortium assembled in 2014 and designed to produce research and development on the usage of blockchain in a financial environment. In December 2015, the not-for-profit, Linux Foundation, launched the ‘Open Ledger Project’, an open-source project bringing together IBM, Cisco, Intel, the London Stock Exchange, and many other organisations striving to build a cross-industry open standard for distributed ledgers. At the same time, the financial messaging company, Swift, introduced a blockchain-based service for business-to-business payments. Other organisations are also already offering services based on blockchain technology, such as Nasdaq, the stock exchange, and Ripple.

Blockchain is said to have the potential to revolutionise payments by making them faster, cheaper, and safer. However, it also raises a number of issues. What is needed to progress on blockchain and make it a reality? Is it even desirable to expand the use of blockchain to the financial industry? In other words, is blockchain a short-lived illusion, or does it have the potential to be a real game changer? To shed some light on the topic, the European Payments Council (EPC) gathered six experts from big name companies in the banking (ING), processing (Equens) and consulting (BCG) industries, as well as disruptive financial organisations (Fidor Bank, Bitpay) and a central bank (Banco de España) to attempt to answer this question. 

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